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tv   Mad Money  NBC  May 30, 2012 3:00am-4:00am PDT

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because martin's going to be on tomorrow. plus summer camps for kids. bye, everybody! -- captions by vitac -- c. i'm jim cramer, and welcome to my world. i'm just trying to save you a little money. my job is not just to entertain you but i'm trying to ach and educate you. so call me at 1-800-743-cnbc. right now we're at the mercy of the largest game of chicken worldwide that i can ever recall. european chicken, that is. kok aw vin. hon schshin. cacciatore. pollo loco. you name it. the germans weren't going to give an inch on the pursestrings of europe which they control. on the other hand now there's all the other countries of europe which think because of
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the troubles in spain and italy, not just greece, that bonds must be printed and printed by the trillions so that all the economies in the continent can grow. not just germany. today the rest of europe won, at least momentarily, which is why the dow rallied 126 points, the s&p gained 1.05% and the nasdaq climbed 1.18%. ♪ hallelujah traders in this country simply cannot afford to miss the moment when germany blinks and sacrifices its own interest to save the rest of europe, something that's perceived as inevitable now that the french have turned on the germans and the spanish bond market is imploding. in the meantime, though, if those traders are in the market owning stock on a day when merkel's tough and spain falters and another european country hits the radar screen as damaged, then -- >> the house of pain! >> -- they lose. today was a hope day. a day when people expected the germans to blink, in part because of the hopelessness of spain but also because even
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germany's worried about the world economy these days. i think the germans are concerned that china's going to slow. if it can't dump goods on the european market, that's a gigantic market for their stuff. not like ours. much smaller. and so therefore what the germans are doing could be bad for the entire world. here's what's tricky. without europe we've got a pretty darn good market led by the retailers, restaurants, utilities, companies that benefit from the europe-induced decline in commodities with some health care stocks. with europe benign, though, we have everything going for us. everything going higher. techs, oils, the banks. and you can see from today's screen how bountiful it really was. think about it. europe's been the proximate cause of everything that's been, everything that's blown up. fossil. where the stocks of even the good apparel brands are unable to avoid the gravitational tug of europe. we saw it in tech, semiconductor firms-u name it.
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we've seen it in banking ever since jpmorgan crushed the whole industry by being so heavily exposed to a runaway european train they didn't even know they were exposed to. we've seen it in capital goods where any company with any exposure to the continent is a heartbeat away from blowing up. at least that is the way things trade. that means good businesses like cummins, oh, numbers trim. goldman. boeing. like that for the charitable trust. caterpillar. another charitable trust name. these are hurting. >> sell sell sell! >> or at least we think they're hurting. they say they're not. doesn't matter. we've seen it in oil where the whole world seems to think that european economies are holding down the price of crude. of course in reality oil's not even down that much. brent crude's not under 100. but whatever decline there is we always hear about the european alibis. we've seen it in the chemical companies, all of which have been global for some time and are about to have giant estimate cuts if something isn't done soon. even as the raw costs here have plummeted thanks to lower natural gas prices. we've seen it in the mineral mining place. you can't get enough business in china to make up for european witness. have you looked at alcoa? it's all the way back down after reporting a decent quarter. that tells you that europe's
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amillstone, pulling down the best, drowning the most in danger of going into red. these are huge portions of the u.s. economy that are being held u.s. economy that are being held age by this angela merkel, the german chancellor. huge. i'm surprised there isn't a much more populist backlash here against what the germans are doing. you've got to believe that on some level she's feeling the heat from the united states and china. which tire of her worries about hyperinflation at a time when worldwide deflation is the real enemy. boy, if the united states would just say merkel, enough, i bet you she'd back down. which is why people are so afraid of not being in stocks. what's amazing is until merkel changes her views, though, all numbers for all these sectors are going to have to come down. the estimates are too high. they have to come down in ways that don't support the current valuations after today's rally. you can bet all you want that the germans will get with the program but the longer they hold out the worse things will get. so we play this game of chicken where there are signs of europe that are hopeful like all the european stock markets climbing except for spain today signaling perhaps today's the day when something good happens. so our stocks fly.
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these kinds of days are followed by days of sullenness where the germans refuse to yield and all of the stock markets go down over there, taking ours with them. of course all this could somehow be left at the shores of europe if we could just get some consistent solid economic growth here in america. we have some growth, but it's episodic, sporadic. we know that retail's been buoyed by lower gasoline prices. we know the restaurants have been helped by lower commodity prices. one look at the 52-week high list with the likes of brinker's aka chili's or walmart, that tells you how good things are. we know the mortgage market is better despite what the case schiller data say about housing. when in doubt you trust the number from wells fargo. 25% of the market. the company's towed it straight the whole way and they think things have bottomed. trust toll brothers, the national home builder that has been so bearish and is now hopeful about home volumes and prices. but we have nothing good when it comes to employment, the most important thing in the world. which means if we get a weak national jobs number friday on top of something bad in europe
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on thursday everything you saw on your screen today will be washed away in red ink. personally, i hate these kinds of situations. what do we really know about europe? it's a total black box. who knows how merkel's going to respond to the pressure? china, so important. seems to be disappearing as a force for growth rather than we come in hoping they've done something. most of the estimates for the non-domestic companies in our country, meaning any that aren't touched by international, are at risk. we're simply hoping for a resolution. the longer we don't get one, the more banks will fail over there. the more humpty dumpty the situation will become until all of merkel's horses and all of merkel's men can't put the eurozone back together again. so we play the game of chicken with days like today where the market rallies because things got too negative versus europe's screw turning on the germans. and then there are days where we lose strength ourselves on top of a foul greek pole that says the leftists are going to be wing or the spanish bank season that makes it even more likely that things are going to go down
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before they go up. all the while we have to deal with the hazards of companies like jpmorgan, not knowing what they're talking about. and the likes of facebook, creating huge waves of disappointment. more on that later. and we have to deal with the mechanics of the hedge funds and mutual funds. as in are they just taking this market up to improve their performance in a horrible month? window dressing? in europe they're probably saying ouvre la finet relative e. all the good can turn on a dime while all the bad seems to stick with us for any company that's ventured beyond our shores. that's a game of chicken. it's no way run a stock market. of that i am certain. linda in michigan. >> caller: thanks for taking my call. friday morn i go was eating cranberry almond crunch is he cereal and listening to the post earnings call. and it was bad news. i thought the market was rational with a possible drop on
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friday. but it didn't drop. it went up. then today it's up again 5%. what happened on that call that i didn't understand and is it a buy, sell or hold? >> i like the post guys, and i like them because they are literally saying that things look better than before. they're making more money than we thought even though the earnings don't look so good. they're predicting positives. remember what we care about, the future, not the past. i think post is dirt cheap. i've got to tell you, i think that post remains one of the more exciting stories out there that is a billion-dollar market cap. let's go to john in virginia. john. >> hey, jim. second time, long-time. with the question europe being very weak right now and the ecb keeping interest rates low is it a good idea to look into investing in german companies that export out of the e.u.? i would think with the weak euro it would help german industrials and manufacturers that export. if you agree do you have any companies that you like? >> the only one that i have really been a very, very big believer in, and it hasn't been great so i don't want to tell you you that should be in there
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buying the heck out of it, is siemens. there's the problem. i don't like europe. so the moment i say that here's a european stock, i'm going to hurt you. so the answer is i'm not recommending anything from europe. nothing. not bonds. not stocks. not currencies. nothing. we've got a brutal game of chicken going on. whether it be koch au vin cacciatore. hanshin. pollo loco. this is no way to run a stock market. just find some real good stocks, u.s. stocks, good dividends, retail, restaurant, ride it out. "mad money" will be right back. >> coming up, neighborhood watch. housing data released today had some investors feeling like they're on a rocky foundation. tonight, cramer's inside look from a ceo on the company on the front lines. can owens-corning help keep your portfolio insulated? and later, fashion flip? shares of this retailer have
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gotten back in shape after being out of style on the street. but can it continue to shine on its walk down the runway? cramer's seeing if there's still time to try this investment on for size. plus, air time? after winning a prolonged fight against a hostile takeover, shares of air gas have been up, up and away. does this company still have gas in the tank to head higher, or could concerns of a global slowdown cause it to deflate? cramer's speaking to the ceo to find out. all coming up on "mad money." we all know there's nothing more important than family. >> on june 15th we're celebrating our fifth annual edition of "mad money: it's a family affair." >> once a year only check it out. >> want to join cramer in studio for the special event? >> we're having a bit of a brotherly dispute. >> well, the doctor's in the house. >> head to madmoney.cnbc.com to sign up for free tickets. >> the family that invests
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get our heads around, there are still big domestic themes that are working, themes you can count on. themes like the rebound in housing. something that has absolutely nothing to do with the greek bailout or the pain in spain, which is also a housing-related problem but it's over there. lately we've gotten a bunch of bullish data points. the most recent existing home sales numbers were excellent. toll brothers reported a terrific quarter and they told us many good things and i trust toll. if home building is coming back with a vengeance in this country what goes into making a new house? how about owens-corning? a cup that gets 64% of its sales from roofing shingles and especially insulation. owens-corning has the big composites business. they're the world leader in composites like fiberglass. that are used for all kinds of applications. everything from transportation, infrastructure, ships, aerospace, military, industrial. even windmill blades. now, while most home building-related stocks have been rallying hard, the most recent quarter was tough. in part because of raw costs but also international woes.
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however, if housing is on the rebound then this stock should come with it. don't take it from they me, though, let's talk with mike fayman, the chairman and ceo of owens-corning to find out more about his company and where it is headed. welcome back to "mad money." >> thanks for having me, jim. it's great to be back. >> oh, thank you, mike. i know you weren't that thrilled with your first quarter, but you did keep your guidance intact and it made me seem like the second half is going to be strong. how is your confidence level right now given what we're seeing in housing but also what we're seeing internationally? >> jim, our confidence is good. we said on the earnings call we needed to see a couple things happen. one was we wanted to see a more positive price environment in our roofing business, and we're seeing that. we also needed to see some improvement in insulation and composites as the year went along. we expect housing to build, and that will really help our inside
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-- insulation business. we're taking a lot of action in europe and around the world to improve the costs position of our composites business which will also cause that business to improve through the years. we're on track with our guidance. we think we can have another year of earnings growth. and we think that's a great story that leads us into a tremendous 2013. >> now, a lot of people concerned because of your conference call that margin issues could still dog you. we have had since that call a rather dramatic decline in the price of oil. including today. i know that's an important raw cost for asphalt. are you beginning to see some pricing relief on your raw materials costs? >> we're not yet seeing any reduction in asphalt costs. typically, asphalt is more expensive during the summer because that's also when asphalt's used for paving and road repairs. seasonally, this is a time of year when asphalt's a bit more expensive. so if anything, the decline in oil prices would maybe cause us to not see some of the inflation that might have been coming in asphalt through the summer. so right now we're in a pretty good position with asphalt. we think asphalt price wills remain elevated through the summer and we think the roofing business will be able to recover that in terms of the pricing of our shingles.
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>> this morning we had the case schiller index revealed on "squawk on the street," my other show. it's still showing things not good but what we hear from many retailers and toll brothers and lennar is things are getting better in housing. if you are sticking by your outlook i have to believe you think that's the case too. >> we've seen a lot of good leading indicators in the housing that have given us some optimism. first of all, obviously we've seen rent inflation in a lot of rental markets which makes renting more expensive and causes people to want to buy homes. we've looked at the housing price data over the course of the last couple years, and while it's been kind of trending down a little bit if you pull some of the foreclosures out of the data the underlying market seems to be a bit stronger and we know inventories are way down. we're seeing a lot of the market force that's will cause a housing recovery to come. we're obviously very heartened to hear what the builders are saying. they've been much more optimistic in this spring selling season. we expect with some good sales in the spring that will lead to production in the summer which will help our second half with significant volumes in roofing
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and insulation facing new construction. >> mike, i totally agree with you on the domestic situation. your company has made major inroads in becoming a world leader, not just the domestic leader. and yet we know this is a time when being world leader isn't loved as much by wall street. i know you can't regret the strength that you have overseas. but i mean, europe i know you're trying to take some costs out. but we hear that it's so bad, it's so overbuilt in housing. how many years will it take in your eyes for europe to recover? >> well, it's a great point. in fact the business that we have that's our most global business is our composites business, which is much more of an industrial materials business than a building materials business. it was really the business that powered our earnings the last couple years. this year we expect it to go back a bit because of some challenges in europe. what we're seeing in europe today is at the end of the financial crisis in '08 and early '09 we thought it would take europe about three years to get back to 2008 levels.
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in fact, when europe went negative again in the second half of last year we that i that target is delayed for another three years. we've taken action in europe to reduce our capacity there, to take out some high-cost assets. we think that accelerates the pace at which composites gets to a significant low-cost global network. and we've continued to express a lot of confidence that we think that business could be mid teens operating margin by the middle of this decade. >> one last question. you've taken that excess cash. you're paying very little for the interest. you've authorized a 10 million share repurchase. how do you decide between that -- because some firms are really deciding right now, maybe repurchase isn't as good as dividend. how come that's a better use of your capital than returning it to shareholders in the form of a dividend? >> as you know we have three great businesses and three great industries. and in fact the business that's historically been the best business for owens-corning, our insulation business, has been challenged by a very weak housing market.
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we've taken a position w. our investors that we believe we'd like to see a strong recovery in housing and a strong recovery in our insulation business so that all three of our businesses are performing at a very high level. before we would take a step of paying a dividend. owens-corning was always a dividend payer in the past. as of recent we've been able to maintain an investment grade balance sheet. we've been buying back shares with excess cash flow but i think at some point in the future we'll give that stronger consideration. >> all right. terrific, mike. yes, and that's what i was thinking. i remember when i was at goldman sachs and i always liked to remember owens-corning because you had a great yield. i'm thinking it could happen again. mike thaman, chairman and ceo of owens corning, thank you very much for coming on the show. mike thaman chairman and ceo of owens corning. it has lagged the group but it's got european exposure. make your decision wisely. look at the presentations. because maybe it's not the best way for you to play housing but i think housing's coming back and this stock remains cheap. stay with cramer. >> coming up -- fashion flip?
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shares of this retailer have gotten back in shape after being out of style on the street. but can it continue to shine on its way down the runway? cramer's seeing if there's still time to try this investment on for size. how much coffee are you fellows going to need today? three...four cups? [dumbfounded] well, we... doesn't last long does it? listen. 5-hour energy lasts a whole lot of hours. so you can get a lot done without refills. it's packed with b-vitamins and nutrients to make it last. so don't just stand there holding your lattes, boys. make your move. we'll take the 5-hour energy. smart move. 5-hour energy. hours and hours of energy.
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a, the appearance. amber. [ jim ] b, balance. sam adams has malt sweetness, hoppy bitterness. [ jim ] c, complexity. pine notes, grapefruit notes. only believe your own pallet. go taste them.
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yeah. management matters. i can't emphasize this enough. the executives running a company
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can have a tremendous amount of influence on its stock price. a ceo who doesn't know what he's doing, he's like a ticking time bomb. witness ron johnson, who single-handedly blew up jcpenney stock after just one quarter of a questionable turnaround strategy. it caused the stock to lose nearly 20% of its value in a single session a couple of weeks ago. jcpenney is the gift that keeps on giving. notably to macy's, target, ross stores, and walmart. but when management knows what it's doing practically anything is possible. consider the incredible comeback of gap stores. gps. the parent of gap, old navy, banana republic. athleta and pap'llon. gap was a powerhouse in the -- courtesy of mickey drexler. hope you watched david faber's special. mickey drexler is applying his magic at j. crew. but for the past decade gap lost its way.
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for years gap had been left for dead. this had been the ultimate has-been retailer. a company that was out of touch with its customers, with some of the least appealing merchandise of any apparel i follow. and that's really saying something because it's not like i'm the most stylish guy in the universe. normally i don't like to judge a clothing retailer based only my subjective assessment of its products because there's no accounting for taste and what looks bad to me might look good to somebody else. but gap was the exception that proved the rule. as the company became synonymous with lifeless and generic attire, you didn't want to be caught dead falling into the gap. [ rimshot ] all of which led to year after year of subpar results. from 2006 to 2011 gap's results declined. that is awful. even worse the company's same-store sales that ultimate metric for retail abysmal. for seven of the last years the same-store sales were flat or negative.
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the merchandise was consistently weak. and no matter what gap did the company just couldn't connect with its customers. but about 12 months ago gap started to get its act together thanks to the terrific efforts of glenn murphy. the chairman and ceo who came from drugmart. the largest drugstore chain in canada. and before that he ran canada's largest bookstore chain. murphy took over back in july of 2007. and those it's taken him a few years to get gap where it needs to be the turn is now undeniable, the brand has been resurrected. so is the stock which is up 49% year to date. it's not done. how did murphy do it? not surprisingly the turn at gap has a lot in common with the similarly miraculous companies we've seen at pier 1 and chico's, two turnarounds i talked to you about last week and very little in common with what ron johnson is trying do at jcpenney. like we've seen with other successful retail turns, murphy is a guy who was able to come in and just clean house.
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no sacred cows here. but he created no expectations and was totally unknown and tremendously low-key, at least publicly. however, my friends who work with him say it was no surprise because he's considered a born leader. and the actual merchandise doesn't even matter to him as much as the people he selected who do know merchandise. the man knows his own limitations. murphy decided to reduce non-sales head count, slow gap's sales growth and -- buy back a monster amount of shares. more importantly though and ws this is where gap is really the polar opposite of jcpenney the company's been doing everything it can to get back in touch with its customers, find what they want. hey, customers, they matter. at penney ron johnson unilaterally decided to eliminate their favorite concept, sales and coupons, figuring that shoppers would rather that the same low price every day. it backfired. turns out people like their sales and love their coupons, which is why penney's saw a horrendous 18% decline in same-store sales in the latest quarter.
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where did penney go wrong? they made a top-down decision without any actual feedback from the customers. i'm calling it pure arrogance. gap is going the total opposite direction. bottoms up approach. they recognized they have no idea what the consumer wants. so the company's putting a ton of effort into figuring it out. last six months of 2011 gap put more time, energy, and money into making sure they were in front of their customers and talking to them. the plan is for gap executives to read the results across its entire fleet of stores, then reallocate to those storms where the product is performing better and pull back on the allocations where the product is performing less well. they're getting immediate feedback from store managers, even posting comments from customers and having their merchants respond instantaneously. and this plan, ladies and gentlemen, is working. the company's investing heavily in market its plans for the first time in years because they're so much more confident in the product. at gap they've injected more color into the merchandise. at old navy where they've asked me to be a spokesman for their jeans because they know taste i had to turn them down because of the conflicts obviously. but they did come to me.
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can you believe it? they had these really cool cartoons of me. at banana republic they developed a new line of merchandise in partnership with "mad men." should that have been who i am? and "mad men," this product has produced the best first quarter in the history of the division. speaking of "mad men," wasn't that the single best episode ever on sunday? that show's the meanest show on earth, and no one even gets killed on it. we know the turn at the gap's working because the most recent quarter that was reported on may 17th it was stellar. after years of flat comps gap same-store sales were up 4%. in fact this was the first time in over a year that all three of the company north american divisions had positive comps. gap up 5, banana republic up 5, old navy up 4. the company's gross margins shrank by 15 basis points because of high commodity costs. but because of huge shaves in commodity costs across the board this should be a nice tailwind for gap in the second half.
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plus there's international ticker. gap gets 14% of its sales from outside the u.s. and canada. but don't worry, only 6% comes from europe. europe can't take them down. company's expanding more rapidly overseas including in china. and gap's online business, it's booming, up 18% in the last quarter. unlike jcpenney which eliminated its dividend, protected the balance sheet that most people had thought was in good shape, gap is rewarding its shareholders with a dividend increase. no balance sheet worries at gap. while i am terrified of penney's debt mountain. here's the bottom line. memo to ron johnson at jcpenney. if you want to know how to turn around an ailing retailer, just take one look at gap. the company is succeeding because management led by glenn murphy figured out how to get in touches with its customers, give them what they want. and i think the stock's still a buy because this turn has only just begun. i think we should start the questions with tom in michigan. tom. >> caller: hey, jim, big university of michigan boo-yah to you. >> fabulous school boo-yah back
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at you. >> caller: hey, i'm calling regarding american eagle outfitters, aeo. i've made a nice little run on it and wondered if you thought it was time to ring the register. >> tom, i'm going to do something i don't know if you want me to do but i am going to literally throw this back at you. i have made a stand on "mad money" about american eagle outfitters, about abercrombie & fitch, and basically what i've been saying is you know what, guys, i cannot predict what these companies do. abercrombie, aeropostale. what do i know about them other than the fact i paid them a lot of money because somebody visited them from my family. in other words, tom, it's your call. don't be greedy. how about peter in ohio? >> caller: hey, jim, thanks for taking my call today. i wanted to ask you a little bit about sotheby's, symbol b.i.d. i specifically started buying around 39 bucks a share. and have been adding to it on 5% pullbacks. and it seems like we've seen a lot of those recently. my objective was to capitalize upon the fine art market that
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we've heard a lot about here over the last year or two. so i wanted just to get your general thoughts on b.i.d. should i be concerned about the correlation to europe? >> that's an inflationary play and we don't have a lot of inflation. when i think of masterworks i think of hyperinflation. if anything, if europe keeps imploding we've got deflation sotheby's is just going to be an okay, not great stock. sorry. ron johnson and jcpenney, you should mind the gap. gap knows how to turn a retail company around, which we all know is not easy. once again, management matters, and gap's got real good management. stay with cramer. coming up -- ride the lightning. take a nonstop thrill ride as cramer goes stock after stock. all your calls taken rapid-fire on the "lightning round." and later, air time? after winning a prolonged fight against a hostile takeover, shares of airgas have been up, up and away. does this company still have gas
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in the tank to head higher or could concerns over a global slowdown cause it to deflate? cramer's speaking to the ceo. coming up on "mad money."
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it is time! it is time for the "lightning round" on cramer's "mad money." sell sell sell. my staff prepares the graphics on the fly.
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play until we hear this sound. [ buzzer ] and then the "lightning round" is over. are you ready skee-daddy? it's time for the "lightning round" on cramer's "mad money." let's start with adam in colorado. >> caller: jim booya from the rocky mountains, man. >> thank you, partner. >> caller: yeah, we want to get some insight to advance auto parts. subject to a steep sell-off last week. >> no, i don't want you to touch that. the one that i said to buy after they reported was auto zone, azo. >> buy buy buy! >> more consistent buyback stock. scott in south carolina. scott. >> caller: gamecock boo-yah to you. >> i couldn't agree more. >> caller: i'm calling on michael kors, k-o-r-s. >> i've got enough problems. i don't need to do michael kors. i like bbh. that one's better. i do think kors could go higher. i think pvh goes higher still. let's go to chuck in texas. >> caller: this is chuck in pittsburg, texas. boo-yah. i have a question about pilgrim's pride corporation. >> i like pilgrim's pride because their cost is grain and
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grain is coming down. let's go to j.r. in new york. >> caller: cramer. >> yo, yo. >> caller: i just want to know on windstream. is the dividend safe or someone. >> to tell you the truth, i don't know. that was a real nasty quarter. that was like a -- that was just a quarter. so i ain't recommending anymore. i'm done. i'm taking the dividend and running. i just think that quarter was really bad. i'm sorry. i know i had those guys on. but that was just a bad quarter. let's go to lauren in new york. lauren. >> caller: hey, jim. how are you doing? a big boo-yah from long island. i love you. love your show. >> really? i was out on the island. i mean, you know, it's a big island, but you never know. >> caller: i saw you. what do you think about arena, arna? >> you know what? i like speculation. i think that that stock can go higher if they really do have the magic pill. that said, it did have a move. let's be a little careful out there. let's go to bob in texas, please. bob. >> hello, jim? >> yo, bob.
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>> caller: jim, i want to wish you a good howdy texas boo-yah. >> i'm liking that. >> caller: for sir james, our knight templar, who's battling to keep a level playing field -- >> sure trying. >> caller: -- for the little guy. >> sure trying. >> caller: my stock is terra nitrogen, tnh. i've held it for quite some time. i've watched it very, very closely. could not understand why suddenly on april 16th the stock started crating -- crating about 10, 20 points a day. lost 1/3 of its value. and there's no explanation on the web at all. i saw no news why it should happen. >> well, they did cut their estimate. you know, potash cut its estimates. potash is the bellwether in the group. everything responds to potash. and that's why they went down. don't forget, deere told a really nasty story, too. although deere's starting to come back. i'm going to tell you -- >> don't buy. >> that stock. i don't want you to own it. i want to go to terry. terry.
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>> caller: what's going on, jim? >> i don't know. i've got some sort of allergy going. what's up with you? >> caller: i'm out in california. i want to stock called reach local. >> don't reach for reach local. i've got enough problems with these market companies. i would be a sell sell seller of that, take the money and run. and that, ladies and gentlemen, is the conclusion of the "lightning round"! we all know there's nothing more important than family. >> on june 15th we're celebrating our fifth annual edition of "mad money: it's a family affair." >> once a year only. check it out. >> want to join cramer in studio for the special event? >> we're having a bit of a brotherly dispute. >> the doctor's in the house. >> head to madmoney.cnbc.com to sign up for free tickets. >> the family that invests together stays together. what if you had up to 28 days of beautiful ? you can have up to 28 days of beautiful, smooth skin,
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hey aren't you. yep. vogelsong and posey did you check the rating? the rating? yeah, it's simple. always check the rating symbol on the front and read the content descriptor on the back now that's a good call. thanks guys. ahh son, i don't think this game is for us. maybe you should get this one. this kid can play. [female announcer] for more information, visit esrb dot org.
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normally, when a company catches a takeover bid, we want management to say yes so the shareholders can take the money and run. that's the rule of thumb. but every now and then you'll find a truly exceptional company that's too good to be taken over because the business is so strong and the existing management so talented that they can make you more mine by staying independent. that's the story of airgas, arg, the largest distributor of packaged gases and related equipment including welding and safety gear in america. you might remember that a little more than two years ago airgas caught a lowball hostile takeover bid from air products and the company spent a year fending off its unwanted suitor. eventually at the end of 2010 airgas offered $70 a share as
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the highest price they can pay. but the fabulous ceo of airgas insisted he can create more value for his shareholders by staying independent. and we on "mad money" backed the causelin's judgment, recommending on the first time for the show that you not ring the register. finally last february air products refused to raise its offer higher and backed off. 15 months later airgas is now trading at $88, or 25% higher than the final bid from air products last year. in short, causelin delivered. and i think there's plenty more up side where that came from as airgas is 100% domestic, its latest quarter was terrific and most of its end markets are rebounding here and the company just boosted its dividend by 25%. yield 1.8%. okay. not eye level but that's low only because the stock has done so well. but sadly, with causelin stepping down as ceo after the company's annual meeting in mid august to be succeeded by the current chief operating officer, although he will stay on as executive chairman.
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this guy's been one of our favorite ceos out there, perhaps the most bankable chief executive we've ever had on this show. which is why i'm thrilled that peter mccauselin, chairman and ceo of airgas is here with us tonight to talk about what's next for his company and himself. welcome back to "mad money." >> thank you, jim. it's good to be on again. >> all right. peter, after winning this fight and making so much more money for shareholders than if you had acceded to air products' bid, why are you retiring? you have so many years left. or should i start thinking about retiring because you're only about three years older than i am. >> well, first of all, i'm not going anywhere. i'm going to be executive chairman. and i'll have responsibility for acquisitions and strategy development and i'm turning over the role of ceo to mike, or our board is actually doing that. and mike is really a proven executive. just an incredible guy on execution. and he's very good on strategy development.
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and i'm still -- i'm the largest shareholder, and i'm very, very comfortable. >> peter, you ever talk to the air products guys? and if you see them in the hall, would you say anything to them? >> i don't have any dialogue with the air products guys at all. they are still a big supplier of ours there are others in the company that have dialogue. but i don't. >> i think that's probably better that way. anyway, airgas is a packaged u.s. -- you guys have fabulous, very easy to understand presentations for people who want to learn about the company. there are 100 independents that account for nearly 25% of the total market. the 100 largest. but 900 altogether 50%. are these the people that you are going to be seeking out to figure out whether they should join the airgas fold once you step down as ceo? >> yes. you know, although we have 25% of the market, we feel like we have a lot of runway in terms of acquisitions because as you say,
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50% of the market, or slightly over that, is held by 900 independents. and the federal trade commission looks at how many options a customer has. and there's hundreds of local markets in the u.s. because you can only haul packaged gases 50 to 75 miles from the place where they are filled. so the ftc wants to know how many choices does the customer have? how many competitors are there in each of those local markets? and with 900 independents out there in most markets there are many competitors. >> now, peter, one of the things i thought was great about your presentation is you have a nationwide map and it looks like there's whole areas of the country, a lot of california, 1/5 of the country, a lot of florida, a lot of texas has very little representation for your company right now. >> well, we're in most major markets. but you're right. there are parts of our network that are a little thin where
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there are real opportunities for us to gain some critical mass through acquisition. and you know, we also do scratch starts, you know, open up new stores occasionally. usually, when a national customer wants us to go to a particular location to serve their facility, but most of our growth in terms of number of locations comes from acquisitions, and we think there's a lost pent-up seller's demand in the acquisitions area. and when the economy continues to improve and a lot of these companies get back to even they'll think about selling. >> one of the things you mentioned that was throughout your presentation, your trucks, of which you've got thousands of, take smaller bites, 50, 70 miles. wouldn't it be good, since you understand the gas business, to switch to those trucks to natural gas engines made by cummins or westport, save a lot of money, have them fill up
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overnight? you know nat gas better than anyone. wouldn't that be a great way to cut your bills and also do what's right for the country? >> well, it's looking like a good possibility, and that's something that we're looking at very closely. we actually did that, jim, back in the 1990s. we only did that with one location. but we took three or four vehicles and we converted them to lng. and we actually invited local businesses in the area to come and fill up at our particular lng gas station. and needless to stay the cost of lng went through the roof and the delta between that and -- you know the story. but it's something that we're looking at very closely again. not only for our own fleet but maybe even being in the lng business because lng is a cryogen very similar to nitrogen. of course it's flammable. >> see, if you endorsed it, then i know the rest of the country would endorse it because no one knows this fuel like you.
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>> well, i'm sure there are companies that know lng better than airgas, but we were involved at one time. it is a cryogen. it's something we feel we can handle. and you know, the logistics are very, very similar to atmospheric gases. >> well, peter, look, i want to wish you the best of luck. you did it. you called me. you said listen, we can do better than air products. almost everyone makes that promise, and almost everyone fails to deliver. you didn't. congratulations to you. best of luck as executive chairman. thank you for coming on the show. >> okay, jim. and jim, thanks a lot for your support. it was pretty meaningful. and all of the airgas associates really appreciate it. >> ah, you're terrific for saying that. peter mccausland, president and ceo of airgas, a stock that is not done yet going higher. stay with us. stay with cramer. ♪ [ male announcer ] to perform your best,
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we'll never know on the eve of the facebook ipo what morgan stanley's bankers and analysts told their largest clients, the big players who were lined up to take down as much facebook as possible. we can't even guess what they told the insider sellers when morgan stanley increased the size of the offering and raised the price. did morgan stanley tell one group to stay away, don't buy, numbers are too high? did it tell the insider sellers this is your chance to dump as much as possible because the numbers aren't as good as we thought the public's demand for
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the stock is insane. we'll never know what they told the hapless smith barney network. one of these less important retail brokers got through allocation of the stock but for much larger than they thought. holy facebook. we don't know if morgan stanley said hey, we're not saying anything you didn't already know. like the quarter's not coming together. if anyone really knew. we don't know what the bankers said business is really slow this month, much more than we thought because the adoption rate of mobile is happening much faster than anticipated and the advertisers don't like facebook's format. did they say that? we don't even know if they said be careful out there, banker code for bulk up your orders if you're a seller and cut back if you're a buyer. whatever happened it's negative for the stockton.
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down another three bucks today. 9.6%. 24% from the ipo price. we don't know what happened at nasdaq. did the ceo bob greifeld feet pressure to open it anywhere because the corks had been popped? we don't know if it was software, human error. he with don't know why orders were still being filled days and days after the ipo here's what we know. the anti-public spin is in place these days. it goes like this. you silly buyer had it coming. you trusted the banker when they expanded deal and raised the price and at the same time let to be known that so many wanted in on the deal. you trusted the brokers over the place when they told you not to clirnts. i mean, general motors come on, they don't know anything, right? you trusted there were no back cham number cuts because guys like us didn't report them even though i suppose we were supposed to somehow deduce them from the written statements? in short you trusted the system, you big silly. the companies, underwriters, brokers left let you down. facebook's stock is a remarkable reflection of that failure. shame on you. that's what you're saying now. you trusting fools. you should know better. you shouldn't be in the game. that's the rap i'm actually hearing from those who pulled off this nonsense. here's three more things you need to know. one, nothing will ever happen to the people who did this to you. nothing! they've decided it's your fault.
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you were greedy. you were stupid. two, you got had like i've never seen the public be had before. they all played you for chumps. third, and worst of all, the government, it couldn't care less! caveat emptor, baby! caveat emptor! buyer beware. stick with cramer. what if you had up to 28 days of beautiful, smooth skin ? veet wax strips have a hair coating technology that leaves skin smooth for up to 28 days. try getting that with a razor. veet. what beauty feels like. i'm here to unleash my inner cowboy. instead i got heartburn. [ horse neighs ] hold up partner. prilosec isn't for fast relief. try alka-seltzer. it kills heartburn fast. yeehaw!
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understand, it's a giant game of chicken. there's germany. and then there's the rest of europe. everyone kind of feels that germany has to blink. but the longer they don't blink the worse it will be for the estimates for every international company. tech. okay? for banks. they will do badly. the industrials. the oils. today was a day where people feel it's about to end. so you have to buy those stocks. if tomorrow germany's bad and the european stocks go down, all the stocks that went up today that are from international will be for sale.
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